Answer:
Firm A $ 2,412,150.68
Firm B $169,038.85
Firm C $761,699.81
Firm D $614,813.36
Explanation:
The present value of terminal value is the terminal value multiplied by the discounted factor as shown by the formula below:
=ROPI*(1+growth rate)/(WACC-growth rate)*(1/(1+WACC)^n
n is the time horizon for the forecast
Firm A terminal value=$189,122*(1+2%)/(7.9%-2%)*1/(1+7.9%)^4
=3,269,566.78*0.737758499
=$ 2,412,150.68
Firm B terminal value=$27,878*(1+1%)/(11.7%-1%)*1/(1+11.7%)^4
=$ 263,147.48*0.642373043
=$169,038.85
Firm C terminal value=$74,785*(1+2.5%)/(9.5%-2.5%)*1/(1+9.5%)^4
=$ 1,095,066.07*0.695574293
=$761,699.81
Firm D terminal value=$105,733*(1+13.7%)/(13.7%-2%)*1/(1+13.7%)^4
=$ 1,027,507.87*0.598353921
=$614,813.36
